A proposed irrigation scheme for the Central Otago town of Tarras is hanging in the balance, with the Otago Regional Council likely to reject a request to financially back the project.
A report to be tabled at a meeting on Wednesday recommends that the council does not change its long-term plan to allow investment in the scheme which will cost nearly $40 million.
The proposal calls for the regional council to take shares in Tarras Water Ltd at a cost of $3.5 million.
If the council does not, it will jeopardise an agreement between Tarras Water and the Central Otago District Council which provides for a loan for 20% of the project.
Otago Regional Council chairman Stephen Woodhead says it will be up to councillors to decide and they may yet choose to reject the report.
A spokesman for Tarras Water, John Morrison, says the backers of the scheme have no comment and are waiting for the outcome of the meeting.